Title I: Quality Affordable Coverage for All Americans
Title I addresses private (also referred to as “commercial”)
health insurance plans. It mandates that states create health insurance
“exchanges” which are essentially web portal for individuals to comparison shop
and enroll in a health plan if their employer does not have affordable coverage
options. This portal should also help determine if the applicant (or their
dependents) are eligible for programs such as Medicaid, CHIP (for children), or
other subsidies. This is designed to increase access by 1) helping people
connect with affordable plans and 2) enrolling individuals who are currently
eligible for government programs.
How might this
play out? It may lower costs by getting more individuals covered in private
plans so that their care is not written off (and thus passed along to everyone
else) by hospitals and providers. Conversely, it may raise costs by increasing
the number of people who are enrolled in state and federal programs that are
notorious for low reimbursement. When providers and hospitals are not getting
revenue from one source (i.e., government programs), they simply shift the cost
to another source (i.e., private insurance).
Title I is also designed to increase access to care by
providing clear regulations for private health insurance companies. Health plans will no longer be able to refuse
coverage to certain individuals or kick them out because they are too sick
(read “too expensive”). This is called
“rescission” in insurance lingo. One of
the most talked-about benefits of the ACA is the mandated option for
individuals under 26 to remain on their parents’ insurance. Young adults are some of the least expensive
individuals to insure, however, they are often left in coverage limbo because
they have not settled into a full-time career with benefits. This provision
will be most beneficial to individuals with chronic conditions developed in
childhood.
These regulations also mandate insures to cover preventive
services as defined by the US Preventive Health Services Task Force (with an A
or B rating). These services are to be covered at 100% with members not sharing
in the cost.
There are two specific mandates that have been hotly
debated: one is the individual mandate and the other is the mandate for
employers that have more than 50 employees.
The Supreme Court ruled that the individual mandate penalty is a tax
and, therefore, is legal. In 2014, the penalty (aka, tax) starts out at $95. By
2016, the penalty will be $695. Premium
subsidies for individuals with a household income of 100-400% of the federal
poverty level are designed to ease the economic impact of getting coverage. For a family of four in the contiguous US,
400% of the 2012 FPL is $92,200. These subsidies are available for those who
purchase through an exchange.
The Small Business Health Option Program (SHOP) creates an
exchange for companies that have 2-50 employees. There is no penalty for small
businesses who utilize this exchange, but there are also no subsidies.
One of the regulations I find most interesting is the
provision that private insurance companies must spend 85% of the money they
collect (80% for small markets) on honest-to-goodness health care. Administration
and profits can’t be more than 15%. I think that this may lead to more
consolidation among the plans as they are force to restructure their business
model. My concern is that many plans may discover that they are not viable and
quality may suffer or they might simply close down shop, leaving fewer options
for consumers.
Title II: Role of Public Programs
This section focuses on Medicaid and CHIP (Children’s Health
Insurance Program). The biggest change is an increase in Medicaid eligibility.
It is hard to know exactly how this will play out in the market place. Some
argue that this will increase the pay to family physicians and pediatricians
(the lowest-paid medical specialties) due to the increased number of people
able to access care. The problem I see with this argument is two-fold. First, I
have yet to meet a family doctor who told me she simply wasn’t busy enough and
wished her waiting room had more people in it. Second, Medicaid is notorious
for a lower-than-market reimbursement rate. If every provider’s practice was
comprised of 10% Medicaid patients, that lower reimbursement wouldn’t have too
much of a financial impact. But when more providers begin to feel that Medicaid
is more trouble than it is worth, the practices that do take it see their income drop as private insurance becomes a
smaller proportion of their business. A friend of mine stopped taking Medicaid
when her accountant informed her that she was losing $40 every time she did a
certain procedure; the reimbursement was
less than the cost of medical equipment utilized. That adds up quickly—and that
was just one procedure. I’m sure that there will be some clinics that
remain economically viable, but I can guarantee that they will need to see an
incredibly large volume of patients.
Even though this section focuses on access to care, Title
II also sets out to improve quality and control costs through innovation demonstration projects
and the creation of accountable care organizations. One example of cost control measures: If a patient’s condition is
caused by seeking care (such as a hospital-acquired infection), the services
required to remedy the situation must be rendered without payment.
